The tabs are not converted to spaces on saving either. I can convert using your method, but whenever I insert a tab it only ever uses the tab character, not spaces, as I have set in Editor->Indentation.
So, a bit confusing (partly down to me I accept!), and I can now convert tabs to spaces from the Document menu, but cannot insert four spaces instead of a tab.
I think the problems in this post are still valid, but it is of course your call ;)